N HE Supreme Court of the United States...AIPLA has no stake in any of the parties to this...
Transcript of N HE Supreme Court of the United States...AIPLA has no stake in any of the parties to this...
No. 17-1229
IN THE
Supreme Court of the United States ____________________
HELSINN HEALTHCARE S.A.,
Petitioner, v.
TEVA PHARMACEUTICALS USA, INC., AND TEVA PHARMACEUTICAL INDUSTRIES, LTD.,
Respondents. ____________________
On Petition for Writ of Certiorari to the
United States Court of Appeals
for the Federal Circuit
____________________
BRIEF FOR THE AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION AS AMICUS
CURIAE IN SUPPORT OF PETITION FOR WRIT OF CERTIORARI
MYRA H. MCCORMACK PRESIDENT AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION 1400 CRYSTAL DRIVE SUITE 600 ARLINGTON, VA 22202 (703) 415-0780 March 30, 2018
LYNN C. TYLER COUNSEL OF RECORD BARNES & THORNBURG LLP 11 SOUTH MERIDIAN STREET INDIANAPOLIS, IN 46204 (317) 236-1313 [email protected]
Attorneys for Amicus Curiae
i
TABLE OF CONTENTS
INTEREST OF AMICUS CURIAE ......................... 1
SUMMARY OF ARGUMENT .................................. 2
ARGUMENT ............................................................ 4
I. The Court Should Review This Case To
Restore The Statutory Definition of
Prior Art. ........................................................ 4
A. The Amended Text Of The
AIA Was Erroneously
Interpreted By Federal
Circuit. ...................................... 5
B. The Federal Circuit
Misapplied Pre-AIA Law
To Interpret The New AIA
Text. .......................................... 9
C. Secret Prior Art and The
Incentives Of The First-
Inventor-To-File System. ....... 11
II. The “Public Availability” Requirement
Reduces Prosecution, Transaction, and
Litigation Risk and Expense Created
By Secret Sales ............................................ 15
ii
III. Other Policy Considerations Support
The Public Availability Requirement. ........ 22
CONCLUSION ....................................................... 24
iii
TABLE OF AUTHORITIES
Page(s)
Federal Cases
Allen Eng’g, Inc. v. Bartell Indus., Inc.,
299 F.3d 1336 (Fed. Cir. 2002) ............................ 17
Bayer AG v. Schein Pharms., Inc.,
301 F.3d 1306 (Fed. Cir. 2002) ............................ 15
Beachcombers Int’l, Inc. v. Wildewood
Creative Prods., Inc.,
31 F.3d 1154 (Fed. Cir. 1994) .............................. 13
Calbeck v. Travelers Ins. Co.,
370 U.S. 114 (1962) ................................................9
Chevron U.S.A., Inc. v. Natural Resources
Defense Council, Inc.,
467 U.S. 837 (1984) ................................................8
Dir., OWCP v. Perini N. River Assocs.,
459 U.S. 297 (1983) ................................................9
Egbert v. Lippman,
104 U.S. 333 (1881) .............................................. 13
Evans Cooling Systems, Inc. v. General
Motors Corp.,
125 F.3d 1448 (Fed. Cir. 1997) ............................ 21
Exxon Mobil Corp. v. Allapattah Servs.,
545 U.S. 546 (2005) ................................................9
iv
Gen. Elec. Co. v. United States,
654 F.2d 55 (Cl. Ct. 1981) .............................. 21, 22
Graham County Water and Conservation
Dist. v. U.S. ex rel. Wilson,
559 U.S. 280 (2010) .............................................. 15
Gustafson v. Alloyd Co.,
513 U.S. 561 (1995) .............................................. 15
Hall v. Macneale,
107 U.S. 90 (1883) ................................................ 21
Helsinn Healthcare S.A. v. Teva Pharms.
USA, Inc.,
855 F.3d 1356 (Fed. Cir. 2017) .................... passim
JumpSport, Inc. v. Jumpking, Inc.,
191 Fed. Appx. 926 (Fed. Cir. 2006) .................... 13
Lorilland v. Pons,
434 U.S. 575 (1978) .............................................. 10
Metallizing Eng’g Co. v. Kenyon Bearing &
Auto Parts Co.,
153 F.2d 516 (2d Cir. 1946) ........................... 12, 21
Monon Corp. v. Stoughton Trailers, Inc.,
239 F.3d 1253 (Fed. Cir. 2001) ..............................6
Special Devices, Inc. v. OEA, Inc.,
270 F.3d 1353 (Fed. Cir. 2001) ............................ 21
Trading Tech. Int’l, Inc. v. eSpeed, Inc., 507
F. Supp. 2d 883 (N.D. Ill. 2007), aff’d,
595 F.3d 1340 (Fed. Cir. 2010) ............................ 19
v
TRW Inc. v. Andrews,
534 U.S. 19 (2001) ..................................................7
Woodland Trust v. Flowertree Nursery, Inc.,
148 F.3d 1368 (Fed. Cir. 1998) ...................... 19, 21
Zahn v. Int’l Paper Co.,
414 U.S. 291 (1973) ................................................9
Federal Statutes
28 U.S.C. § 1367 .................................................... 9-10
35 U.S.C. § 100(i) ........................................................6
35 U.S.C. § 100(j).........................................................7
35 U.S.C. § 102(a)(1) ......................................... passim
Rules
Rule 37.2(a) .................................................................2
Supreme Court Rule 37.3(a) .......................................2
Supreme Court Rule 37.6 ...........................................1
Other Authorities
157 Cong. Rec. .................................................. passim
AIPLA Report of the Economic Survey ................... 18
Armitage, Understanding the America
Invents Act and Its Implications for
Patenting, 40 AIPLA Q.J. 1,9 (2012). ............ 15, 16
vi
Brief for the United States as Amicus
Curiae .....................................................................8
78 Fed. Reg. 11059 ................................................ 8, 12
78 Fed. Reg. at 11062 ............................................ 8, 20
H.R. REP. NO. 112-98 (2011) ........................... passim
Matal, A Guide to the Legislative History of
the America Invents Act: Part I of II, 21
Fed. Cir. B.J. 435, 450 n.97 (2012) ...................... 20
Merriam-Webster’s Collegiate Dictionary
(10th Ed. 1998) .......................................................7
1
INTEREST OF AMICUS CURIAE
The American Intellectual Property Law
Association (“AIPLA”) is a national bar association of
approximately 13,500 members who are primarily
lawyers engaged in private and corporate practice, in
government service, and in the academic community.
AIPLA’s members represent a wide and diverse
spectrum of individuals, companies, and institutions
involved directly and indirectly in the practice of pa-
tent, trademark, copyright, trade secret, and unfair
competition law as well as other fields of law affecting
intellectual property. Our members represent both
owners and users of intellectual property. Our
mission includes helping establish and maintain fair
and effective laws and policies that stimulate and
reward invention while balancing the public’s interest
in healthy competition, reasonable costs, and basic
fairness.
AIPLA has no stake in any of the parties to this
litigation or in the result of this case.1
1 In accordance with Supreme Court Rule 37.6, AIPLA states
that this brief was not authored, in whole or in part, by counsel
to a party, and that no monetary contribution to the preparation
or submission of this brief was made by any person or entity
other than AIPLA and its counsel. Specifically, after reasonable
investigation, AIPLA believes that (i) no member of its Board or
Amicus Committee who voted to file this brief, or any attorney
in the law firm or corporation of such a member, represents a
party to the litigation in this matter, (ii) no representative of any
party to this litigation participated in the authorship of this
brief, and (iii) no one other than AIPLA, or its members who
authored this brief and their law firms or employers, made a
monetary contribution to the preparation or submission of this
brief.
2
AIPLA has no stake in the parties to this litigation
or in the result of this case, other than its interest in
the correct and consistent interpretation of the laws
affecting intellectual property.2
SUMMARY OF ARGUMENT
This case requires Supreme Court review to resolve
the confusion created by the Federal Circuit’s failure
to give effect to a revision of the “on sale” doctrine,
which Congress enacted to bring transparency,
objectivity, and predictability to the patent system.
Under the 1952 Patent Act, the “on sale” doctrine
prevented an inventor from obtaining a patent on an
invention that was commercially sold more than a
year before the application was filed. Its purpose was
to incentivize prompt filings of patent applications
and to discourage the commercial exploitation outside
of the patent term.
When the America Invents Act (“AIA”) replaced our
“first to invent” patent system with a “first inventor
to file” patent system, it did so to harmonize U.S. law
with patent systems around the world and to
incentivize prompt filing of patent applications,
thereby promoting disclosure and accelerating
innovation. Its changes to the “on sale” provision
2 AIPLA has the consent of the parties to file this amicus brief,
pursuant to Supreme Court Rule 37.3(a), based on the blanket
consents filed with this Court by Petitioner on March 13, 2018
and by Respondent dated March 19, 2018. Pursuant to this
Court’s Rule 37.2(a), Counsel of Record for Petitioner and
Respondent received notice of AIPLA’s intent to file this brief on
March 15, 2018.
3
implemented those objectives by imposing a “public
availability” requirement not only on the fact of the
sale transaction itself, but also on subject matter of
the sale transaction, i.e., the “claimed
invention.” These changes abandoned the forfeiture
model of the former on-sale provision, which had
become a trap for unwary inventors, and adopted a
pro-disclosure model which is based on prior art
categories that serve as conditions of patentability.
Although the meaning of “available to the public”
may need to be developed on a case-by-case basis for
different types of inventions, any such questions
cannot justify turning a blind eye to the express
language of the statute. That language, at a
minimum, requires that the “claimed invention”—
with all of its claim limitations—be “available to the
public. Moreover, the decision below will convert
what should be a legal issue in most cases into a fact-
intensive issue in many cases. This will not only
jeopardize the prior investment in inventions claimed
in the patent(s)-in-suit, but will also increase the time
and expense required for discovery, motion practice,
trial, and appellate review.
This Court’s intervention is urgently needed to
ensure that the statutory mandate is observed and
that the congressional objectives of the AIA are
fulfilled.
4
ARGUMENT
I. The Court Should Review This Case To
Restore The Statutory Definition of Prior
Art.
This Court should review this case because the
Federal Circuit’s interpretation of the AIA’s “on sale”
provision distorts the meaning of prior art by
undermining the statutory requirement of “public
availability,” a feature central to the AIA’s purpose of
improving the efficiency and predictability of the U.S.
patent system.
According to the House Report, “[t]he Act . . .
simplifies how prior art is determined, provides more
certainty, and reduces the cost associated with filing
and litigating patents.” H.R. REP. NO. 112-98, at 42
(2011). See also id. at 40 (the “legislation is designed
to establish a more efficient and streamlined patent
system that will improve patent quality and limit
unnecessary and counterproductive litigation costs.”).
The AIA § 102(a)(1) requirement that claimed
inventions be publicly available to qualify as prior art
simplifies the decision to pursue patent protection by
minimizing the cost to investigate whether the
invention has been publicly used or sold. This
requirement also lessens discovery in litigation by
eliminating an otherwise fact-intensive inquiry into
whether the claimed invention was subject to any
potentially invalidating uses or sales.
5
A. The Amended Text Of The AIA Was
Erroneously Interpreted By
Federal Circuit.
As amended, section 102(a)(1) provides as follows:
(a) Novelty; Prior Art.—A person shall be
entitled to a patent unless—
(1) the claimed invention was
patented, described in a printed
publication, or in public use, on sale,
or otherwise available to the public
before the effective filing date of the
claimed invention….
35 U.S.C. § 102(a)(1) (2012) (emphasis added).
Inventors cannot obtain patents “unless” they can
overcome the prior art, making the definition of prior
art fundamental to the patent system.
Congress passed the AIA in 2011 as the first major
reform of U.S. patent law since the 1952 Patent Act,
transforming the former “first-to-invent” system into
the current “first-inventor-to-file” system. The AIA
revised the language of §102(b) of the 1952 Act and
moved it into a new § 102(a)(1), as follows:
(a) Novelty; Prior Art.—Conditions for
patentability; novelty and loss of right to
patent A person shall be entitled to a patent
unless—
(1) the claimed invention was patented,
or described in a printed publication, in
this or a foreign country or in public use,
or on sale, in this country, or otherwise
available to the public before the
6
effective filing date of the claimed
invention; more than one year prior to
the date of the application for patent in
the United States….
35 U.S.C. § 102(a)(1) (2012). The critical differences
between the pre- and post-AIA versions of this
language include:
(1) the title is changed to strike “loss of
right to patent” and to insert “Prior Art,”
reflecting the provision’s focus on
defining prior art rather than forfeiture
events;
(2) “claimed” now appears before
“invention,”
(3) “in this country” no longer appears
after “in public use or on sale;”
(4) “or otherwise available to the public”
was added following the list of patent-
defeating prior art; and,
(5) “more than one year prior to the date
of the application for patent in the
United States” was changed to “before
the effective filing date of the claimed
invention.”3
3 The decision below reveals a misunderstanding of the AIA by
referring in several places to the patent’s “critical date.” Pet.
App. at 19a, 20a, and 25a-27a. “Critical date” refers to the date
more than one year before the filing of a patent application under
the 1952 Act to determine the grace period for such filings.
Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d 1253, 1257
(Fed. Cir. 2001). However, the relevant term under § 102(a)(1) is
“effective filing date,” defined at 35 U.S.C. § 100(i) as “the actual
7
The decision below failed to give full effect to these
revisions, despite the plain language of § 102(a)(1).
The AIA defines “claimed invention” as “the subject
matter defined by a claim in a patent….” 35 U.S.C. §
100(j). The subject matter of a claim is defined by all
of the claim’s limitations. The statute places the
“claimed invention” in the prior art only if it was on
sale “or otherwise available to the public” before the
patent’s “effective filing date.” The term “otherwise”
means “in a different way or manner” (Merriam-
Webster’s Collegiate Dictionary, at 823 (10th Ed.
1998)). Thus, the “claimed invention” is prior art only
where it is made available to the public, by sale or
otherwise. By not requiring the “claimed invention,”
with all of its limitations, to be “available to the
public,” the decision below effectively removed both
terms—“claimed”4 and “otherwise”—from the statute.
E.g., TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001) (“It
is a cardinal principle of statutory construction that a
statute ought, upon the whole, to be so construed that,
if it can be prevented, no clause, sentence, or word
shall be superfluous, void, or insignificant.”).
The USPTO agrees with this plain reading of
§ 102(a)(1). In its examiner guidelines, the USPTO
has stated that “otherwise available to the public” is
a “catch-all” provision that focuses on whether the
disclosure was “available to the public” rather than
filing date of the patent or the application for the patent
containing a claim to the invention” or “the filing date of the
earliest application for which the patent or application is
entitled, as to such invention, to a right of priority….” 4 The decision below acknowledges that at least one element of
the claimed invention, the dosage, was not disclosed to the public
before the effective filing date of the patent. Pet. App. at 24a.
8
whether it falls within another prior art category
defined by the statute. 78 Fed. Reg. 11059, 11075 (2d
col.). Under those guidelines, secret sales do not
qualify as prior art, only public ones do, and this
applies to all documents and activities itemized in §
102(a)(1). Id. at 11062 (2d col.); see also Brief for the
United States as Amicus Curiae at 5, Helsinn
Healthcare S.A. v. Teva Pharms. USA, Inc., 855 F.3d
1356 (Fed. Cir. 2017), No. 16-1284 (“Brief of USA”).
The USPTO’s reasonable interpretation is entitled to
deference. Chevron U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837, 844, 865-66
(1984).
The concurring opinion on denial of rehearing en
banc argued that under the “last antecedent” doctrine
“to the public” modifies only “otherwise available.”
Pet. App. at 11a. “Otherwise available to the public”
is one phrase, however, and cannot be artificially
divided in this manner. Moreover, “otherwise
available to the public” is immediately followed by
“before the effective filing date.” “Before the effective
filing date” indisputably applies to all the listed forms
of prior art – patents, printed publications, etc. But
“or otherwise available to the public” is actually part
of the same phrase, not even separated by a comma
from “before the effective filing date.” Therefore, “or
otherwise available to the public” must also apply to
all the listed forms of prior art, including when the
claimed invention is “on sale.”
9
B. The Federal Circuit Misapplied
Pre-AIA Law To Interpret The New
AIA Text.
The Federal Circuit relied on pre-AIA law to
construe the AIA’s § 102(a)(1) because it felt
Congress’s intent to change the law was not
sufficiently clear. Pet. App. at 11a (citing Dir., OWCP
v. Perini N. River Assocs., 459 U.S. 297, 321 (1983)).
In Perini, the Court considered whether an
amendment to the Longshoremen’s and Harbor
Workers’ Compensation and Health Act overruled
this Court’s decision in Calbeck v. Travelers Ins. Co.,
370 U.S. 114 (1962). Calbeck held that Congress did
not incorporate a “maritime but local” exception to
compensation into the Act. The Court wrote: “Surely,
if Congress wished to repeal Calbeck and other cases
legislatively, it would do so by clear language and not
by removing from the statute the exact phrase that
Calbeck found was responsible for continued
emphasis on the ‘maritime but local’ doctrine.” Id. at
321. Thus, the Court did not hold that Congress can
only repeal a case legislatively by clear language.
In this case, Congress’s intent to impose a public
availability standard for prior art is clear from the
express “or otherwise available to the public”
language of the statute. The changes to § 102(a)(1) are
analogous to the changes to 28 U.S.C. § 1367 which
the Court considered in Exxon Mobil Corp. v.
Allapattah Servs., 545 U.S. 546 (2005). In Exxon, the
Court addressed whether an amendment to § 1367
overruled Zahn v. Int’l Paper Co., 414 U.S. 291 (1973).
Rejecting an argument that the amended statute was
ambiguous, so the Court should consider other canons
10
of construction, the Court wrote: “We can reject this
argument at the very outset simply because § 1367 is
not ambiguous.” Id. at 567. Earlier in the opinion, the
Court wrote:
No sound canon of interpretation
requires Congress to speak with
extraordinary clarity in order to modify
the rules of federal jurisdiction within
appropriate constitutional bounds.
Ordinary principles of statutory
construction apply. In order to determine
the scope of supplemental jurisdiction
authorized by § 1367, then, we must
examine the statute's text in light of
context, structure, and related statutory
provisions.
Id. at 558. Section 102(a)(1), after its amendment by
the AIA, is likewise unambiguous. Congress is no
more required to speak with “extraordinary clarity,”
if that were possible, when amending it than when
amending § 1367. The Court should construe
§ 102(a)(1) consistent with its express requirement
that prior art must be “available to the public.”
The decision below also erred by construing
§ 102(a)(1) according to pre-AIA case law because, as
illustrated in detail above, post-AIA § 102(a)(1)
includes at least five major changes to pre-AIA
§ 102(b). Congress is presumed to adopt the prior
interpretation of a statute only “when it re-enacts a
statute without change.” Lorilland v. Pons, 434 U.S.
575, 580 (1978). Congress did not re-enact § 102
“without change,” so it cannot be presumed to have
adopted any prior interpretations.
11
The plain language of § 102(a)(1) requires that, to
qualify as prior art, the “claimed invention” must be
“available to the public.” Even if the language of §
102(a)(1) were ambiguous, however, the legislative
history would unambiguously impose a public
availability standard on prior art. The House Report
on the AIA explains that “[p]rior art will be measured
from the filing date of the application and will
typically include all art that publicly exists prior to
the filing date, other than disclosures by the inventor
within 1 year of filing.” H.R. REP. NO. 112-98, at 42
(2011) (emphasis added). The House Report continues
that “the phrase ‘available to the public’ [was] added
to clarify the broad scope of relevant prior art, as well
as to emphasize the fact that it must be publicly
accessible.” Id. at 42-43 (emphasis added). This
legislative history confirms the statutory language
that all prior art, including sales, must make the
invention available to the public. The decision below
ignores this Report and incorrectly states that this
reading of the statute depends upon “floor statements
made by individual members of Congress.” Pet. App.
at 36a.
In short, this case presents an important issue of
the proper definition of prior art, which is
fundamental to the patent system.
C. Secret Prior Art and The
Incentives Of The First-Inventor-
To-File System.
Incentives for prompt and complete disclosure of
inventions are necessary to the bargain between the
12
inventor, who receives exclusive rights, and the
government, which receives the disclosure. The
incentive for the inventor to file promptly is
particularly important to the government and the
public where an invention can be kept secret while it
is being commercialized. Under the first-to-invent
system, inventors had a compelling incentive to defer
filing for a patent. The first inventor could extend its
exclusive use of the invention by waiting to seek a
patent until the invention became public, through
either another person’s (1) public disclosure of the
invention or (2) filing a patent application on the
invention.
Metallizing Eng’g Co. v. Kenyon Bearing & Auto
Parts Co., 153 F.2d 516 (2d Cir. 1946), is the seminal
decision on secret prior art. In that case, the issue was
the secret use of a process before the grace period and
the sale of the unpatented products of that process.
One basis for the secret use to be prior art was that
the patent owner was benefitting from both trade
secret and patent protection. As Judge Hand wrote,
“it is a condition upon an inventor's right to a patent
that he shall not exploit his discovery competitively
after it is ready for patenting; he must content himself
with either secrecy, or legal monopoly.” Id. at 520
(emphasis added).5
Under the first-to-invent system, an inventor who
used or sold an invention more than a year before
5 In response to comments that it should preserve the rule of
Metallizing Engineering and related doctrines despite the AIA,
the PTO wrote “some of the purposes ascribed to these doctrines
in case law appear to be ill-suited to or inconsistent with the
AIA.” 78 Fed. Reg. 11059, 11075 (3d col.).
13
filing a patent application was at risk of losing the
right to the patent. The harm of that loss, however,
far outweighed the benefit of encouraging prompt
filing. “The current forfeiture doctrines have become
traps for unwary inventors and impose extreme
results to no real purpose.” 157 Cong. Rec. S1371
(March 8, 2011) (1st col.) (Remarks of Senator Kyl
discussing § 102 of S. 23, which was identical to § 102
of House bill 1249 that became the AIA). Individual
and/or unsophisticated inventors forfeited their right
to a patent because of limited and private uses that
did not disclose the claimed invention to the public.6
“The only effect of rulings like these is to create heavy
discovery costs in every patent case, and to punish
small inventors who are unaware of the pitfalls of the
[pre-AIA section 102(b)].” Id.7
As noted above, with the enactment of the AIA, the
United States joined the rest of the industrialized
world in having a system which awards patents to the
first inventor to file an application covering the
claimed invention. Under a first-inventor-to-file
standard, the reasons for barring an inventor from
6 As examples, the Congressional Record cites Egbert v.
Lippman, 104 U.S. 333 (1881) (corset spring inherently hidden
from view and given to only one woman held to be “in public
use”), Beachcombers Int’l, Inc. v. Wildewood Creative Prods.,
Inc., 31 F.3d 1154, 1159-60 (Fed. Cir. 1994) (improved
kaleidoscope “in public use” because shown to guests at private
party), and JumpSport, Inc. v. Jumpking, Inc., 191 Fed. Appx.
926 (Fed. Cir. 2006). See 157 Cong. Rec. S1371 (1st & 2d col.). All
citations to the Congressional Record in this brief are to volume
157 of the daily edition. 7 See also cases discussed at note 12 supra.
14
seeking a valid patent after a prolonged period of
secret commercial use disappear:
There is no need to also require
forfeiture of patents simply because the
inventor has made some use of the
invention that has not made the
invention available to the public. And
the current on-sale bar [of pre-AIA
section 102(b)] imposes penalties not
demanded by any legitimate public
interest. There is no reason to fear
“commercialization” that merely
consists of a secret sale or offer for sale
but that does not operate to disclose the
invention to the public.
Id. The first-inventor-to-file system provides a strong
incentive to file promptly for patent protection and
thereby disclose the invention to the public. Every day
an inventor delays filing a patent application, even if
it adds another day’s profit from the invention, risks
losing twenty years of patent protection to another
inventor who files first.
Finally, by maintaining an inventor’s right to
obtain patent protection even after a confidential sale
of an invention, §102(a)(1) provides a continuing
incentive to disclose an invention. Once the invention
has been disclosed in a patent application, others can
improve it to progress the useful arts. On the other
hand, if Congress had not protected an inventor’s
right to a patent despite a secret sale, inventors would
have a continuing incentive to maintain and use their
invention in secret. Encouraging such secrecy would
have the effect of retarding rather than promoting the
15
progress of the useful arts. Thus, instead of
discouraging disclosure by maintaining the old
forfeiture provisions, Congress “provide[d] ample
incentive for an inventor to enter the patent system
promptly” in the AIA “[b]y adopting the first-to-file
system.” Id.
II. The “Public Availability” Requirement
Reduces Prosecution, Transaction, and
Litigation Risk and Expense Created By
Secret Sales
Courts have a “duty to construe statutes, not
isolated provisions.” Graham County Water and
Conservation Dist. v. U.S. ex rel. Wilson, 559 U.S. 280,
290 (2010) (quoting Gustafson v. Alloyd Co., 513 U.S.
561, 568 (1995)).8 The introduction of the “public
availability” requirement to the on-sale doctrine is
consistent with the underlying purpose of the AIA to
transform the U.S. patent system “from one of non-
transparency, subjectivity, unpredictability and
excessive complexity, to one that will operate with
near-complete transparency, objectiveness,
predictability and simplicity….” See Robert A.
Armitage, Understanding the America Invents Act
and Its Implications for Patenting, 40 AIPLA Q.J. 1,
9 (2012) (“Armitage”). For example, the AIA
eliminated fact-sensitive, discovery-intensive, and
subjective elements such as the “best mode” defense
from pre-AIA § 1129 and “deceptive intention” from
8 The Federal Circuit erred by focusing on only two words, “on
sale,” not even an isolated provision, let alone the entire statute. 9 Bayer AG v. Schein Pharms., Inc., 301 F.3d 1306, 1314 (Fed.
Cir. 2002) (whether best mode existed is subjective based on
16
pre-AIA §§ 116, 251, 253, 256, and 288. The AIA also
added new § 257 on supplemental examination to
address the fact-sensitive, discovery-intensive, and
subjective inequitable conduct defense.10
Under pre-AIA § 102(b), interested parties cannot
readily determine whether a patent will be subject to
a public use or on-sale invalidity defense. This
uncertainty affects decisions throughout a patent’s
lifecycle. Should a patent be pursued, licensed,
acquired, or litigated? The answers to these questions
depend on the answers to several others. Had there
been a secret use in the U.S. more than a year prior
to the filing of the patent application? Had the
inventor (or a third party) engaged in some arguable
sales activity in the U.S. more than one year before
the application was filed? Was the invention “ready
for patenting” at the time? If so, was that activity
experimental? These questions can only be answered
after completing extensive document review and
multiple interviews or depositions.
The experimental use exception to the on-sale bar
is particularly fact sensitive, requiring consideration
of the following factors:
(1) the necessity for public testing, (2)
the amount of control over the
experiment retained by the inventor, (3)
the nature of the invention, (4) the
length of the test period, (5) whether
payment was made, (6) whether there
was a secrecy obligation, (7) whether
“what the inventor actually believed at the time the application
was filed”). 10 See Armitage, 40 AIPLA Q.J. at 9.
17
records of the experiment were kept, (8)
who conducted the experiment, . . . (9)
the degree of commercial exploitation
during testing[,] . . . (10) whether the
invention reasonably requires
evaluation under actual conditions of
use, (11) whether testing was
systematically performed, (12) whether
the inventor continually monitored the
invention during testing, and (13) the
nature of contacts made with potential
customers.
Allen Eng’g, Inc. v. Bartell Indus., Inc., 299 F.3d 1336,
1353 (Fed. Cir. 2002). When the on-sale bar is at
issue, the parties naturally will seek documents and
testimony bearing on all these factors. In patent
prosecution or transactions, this additional due
diligence adds cost and risk and, in litigation, the
discovery often triggers disputes that require court
intervention, extends the length of any trial, and
creates a voluminous record for appeal.
Because invalidating sales under AIA § 102(a)(1)
are no longer confined to those taking place “in this
country,” the decision below will even increase due
diligence and discovery expenses for alleged sales that
took place overseas. Parties to transactions or
litigation may have to seek documents or take
interviews or depositions or other discovery all over
the world to develop the facts surrounding an alleged
public use or secret sale.
By reducing the amount of due diligence or
discovery required to determine if a sale is prior art
under §102(a)(1), Congress created the certainty
18
required for parties investing in patent applications,
pursuing licenses or acquisitions, and evaluating
patent litigation. Resources that had been directed to
investigations or litigation under the prior law can
now be directed to enhancing innovation (i.e.,
furthering progress in the useful arts). See, e.g., 157
Cong. Rec. S5320 (daily Sept. 6, 2011) (2d col.); see
also id. (1st col.) (“Also, for businesses seeking legal
certainty, our current system can be a nightmare….
Given that both the product developer and competitor
can rely on their own secret documents that the other
side will not see until litigation over the patent
commences, neither of these two parties can gain a
clear picture of whether a patent is valid without
years of litigation and millions of dollars of discovery
and other litigation costs.”). Being able to assess
patentability from publicly accessible information is
essential for making timely and prudent business
decisions, both for patentees and for potential
infringers.
The costs to obtain and enforce a patent are not
trivial, as demonstrated in biannual AIPLA surveys
of its members. The 2017 Report of the Economic
Survey (“2017 Report”) shows that the average cost
for an original application of minimal complexity
ranged from $5,593 to $11,679, depending on the
geographic area. The average cost for a “relatively
complex biotechnology/chemical” application ranged
between $9,050 and $14,750. Of course, the cost of the
application is just the beginning. The applicant must
pay counsel to review and respond to Office Actions,
prepare Information Disclosure Statements, and
undertake other activities. Petitioner states that over
one million patents have been issued under the AIA.
19
Petition for Writ of Certiorari (“Petition”) at 14. The
minimum average investment in these patents at the
2017 rates is between $5.5 billion and $14.75 billion
and the actual investment is undoubtedly much more.
The decision below exposes that investment to
additional risk, risk that was unanticipated in light of
the PTO’s interpretation of § 102(a)(1). See text at pp.
7-8 supra.
Not surprisingly, the costs of patent litigation are
much higher. For cases with over $25 million at stake,
the average cost through trial and appeal ranges from
$2.125 million to over $5.467 million, depending on
the location. Congress was understandably concerned
with lowering these numbers by limiting prior art to
publicly available references, or in other words,
eliminating costly discovery into confidential sales.
Moreover, old “public use” and “on-sale” law led to
many outcomes that defied logic and no longer serve
any policy objective under the AIA.11 As one
commentator wrote:
It is one of the ironies of the pre-AIA
patent law that § 102(a)’s invalidating
“use” must make an invention accessible
to the public, while § 102(b)’s “public
use” can include private uses that are
not accessible to the public. See
Woodland Trust, 148 F.3d at 1370;
Trading Tech. Int’l, Inc. v. eSpeed, Inc.,
507 F. Supp. 2d 883, 893 (N.D. Ill. 2007),
aff’d, 595 F.3d 1340 (Fed. Cir. 2010)
(finding that the secret commercial use
11 See, e.g., the cases cited in notes 6, supra, and 12, infra.
20
of an inventor’s own invention may
constitute public use).
Joe Matal, A Guide to the Legislative History of the
America Invents Act: Part I of II, 21 Fed. Cir. B.J. 435,
450 n.97 (2012). The PTO also recognized that its
interpretation of §102(a)(1), combined with the grace
period of post-AIA §102(b), “avoids the very odd
potential result that the applicant who had made his
invention accessible to the public for up to a year
before filing an application could still obtain a patent,
but the inventor who merely used his invention in
secret one day before he filed an application could not
obtain a patent.” 78 Fed. Reg. at 11062 (Feb. 14,
2019). Treating secret sales as prior art would lead to
that “very odd potential result.” If the Court retains
the pre-AIA construction of “on sale,” it will extend
the uncertainty and oddity of the old interpretation.
Further, it will undermine Congress’s objective to
make the outcome of patent prosecution and litigation
more predictable at the outset and reduce the related
expenses.
The decision below will perpetuate the fact-
intensive approach of pre-AIA case law. It states: (1)
“the AIA did not change the statutory meaning of ‘on
sale’ in the circumstances involved here,” Pet.
App. at 20a (emphasis added); and (2) “[w]e do not
find that distribution agreements will always be
invalidating under § 102(b) [sic – 102(a)]. We simply
find that this particular Supply and Purchase
Agreement is.” Pet. App. at 43a. The opinion
concurring in the denial of rehearing en banc also
portrayed the decision as fact-specific. Pet. App. at 5a.
Thus, the decision below will continue to require
21
substantial time and expense for investigation,
discovery, motion practice, trial, and appeal to define
the specific sales arrangements that do or do not
constitute prior art. This result is contrary to the
congressional intent “to reduce the costs associated
with filing and litigating patents.” See H.R. REP. NO.
112-98, at 42.
The revision of § 102(a)(1) to introduce the
requirement of “public availability” for the sale of an
invention to qualify as prior art was consistent with
the AIA’s overall shift towards objectivity,
predictability, and efficiency. The change brought the
on-sale doctrine into conformity with the public
nature of the other prior art items listed in the statute
(patents and printed publications). Further, it
overruled the cases that had allowed the on-sale
doctrine to reach “any commercial use, public or not,
even where the subject matter of the offer is
unavailable for purchase by members of the public”
and thereby barred patentability.12 Gen. Elec. Co. v.
12 For example, Special Devices, Inc. v. OEA, Inc., 270 F.3d 1353,
1357-1358 (Fed. Cir. 2001) (refusing to recognize a “supplier”
exception to the on-sale bar); Woodland Trust v. Flowertree
Nursery, Inc., 148 F.3d 1368, 1370 (Fed. Cir. 1998) (finding an
inventor’s own secret commercial use before the grace period
may be a public use barring patentability); Evans Cooling
Systems, Inc. v. General Motors Corp., 125 F.3d 1448, 1454 (Fed.
Cir. 1997) (refusing to create an exception to the on-sale bar for
sales before the grace period that result from a misappropriation
of the invention by a third party); Metallizing Eng’g Co. v.
Kenyon Bearing & Auto Parts Co., 153 F.2d 516 (2d Cir. 1946)
(applying the on-sale bar to sales before the grace period of
unpatented products made by the secret use of the patented
process); Hall v. Macneale, 107 U.S. 90, 96 (1883) (finding the
sale of “burglar-proof” safes to be a public use despite testimony
that technology was completely concealed within the safe).
22
United States, 654 F.2d 55, 61 (Cl. Ct. 1981). The
change is consistent with the other amendments
made to U.S. patent law in the AIA, all of which
eliminated subjective, fact-sensitive inquiries.
III. Other Policy Considerations Support The
Public Availability Requirement.
Several policy considerations support §102(a)(1)’s
exclusion of secret sales from the prior art. Some of
those considerations have been discussed above, such
as (1) the first-inventor-to-file standard provides
ample incentive to file patent applications promptly;
(2) eliminating secret sales as a forfeiture of patent
rights provides a continuing incentive to file a patent
application, facilitating continued progress in the
useful arts; and, (3) the needs for increased business
certainty and reduced litigation expenses.
Congress also imposed this public-availability
requirement on prior art to protect U.S. businesses
from having their inventions stolen or patents
invalidated by unscrupulous foreign competitors.
Senator Kyl stated:
Finally, validating prior art will depend
on publicly accessible information, not
private activities that take place, for
example, in a foreign land. As a result, it
will be impossible for a third party who
derived the invention from a U.S.
inventor’s public disclosure or patent
application to steal the invention or
sabotage the U.S. inventor’s patent.
23
157 Cong. Rec. S5320 (Sept. 6, 2011) (3d col.)
(emphasis added). To allow secret sales anywhere in
the world to serve as prior art would facilitate the
theft of U.S. inventions, contrary to Congress’s
expressed intent. The Court can protect U.S.
inventors against this risk by granting review and
reinstating the public availability requirement for
prior art mandated by the plain language of §
102(a)(1).
A final consideration is that upholding Congress’s
removal of secret sales as a forfeiture of patent rights
will assist in achieving a greater level of substantive
harmonization of patent laws among the U.S.,
Europe, Japan, and other countries. AIPLA is not
aware of any foreign country that uses a first-
inventor-to-file system and also includes secret sales
as a basis for a loss of right to a patent.13 The House
Report on the AIA cites “the value of harmonizing our
system for granting patents with the best parts of
other major patent systems throughout the
industrialized world for the benefit of U.S. patent
holders” as one of the motivations for the bill. H.R.
REP. NO. 112-98, at 39. Conversely, maintaining
secret sales as a basis for losing the right to a patent
would detract from Congress’s goal of further
harmonizing U.S. patent law with that of other major
industrialized nations.
13 The Government made a similar assertion in its amicus brief
below. Brief of USA at 10. The fact no other country considers
secret sales to be prior art confirms that the adoption of a first-
inventor-to-file system provides a sufficient policy incentive to
ensure early disclosure.
24
CONCLUSION
The Court should grant the Petitioner’s writ to
review this exceptionally important issue under the
America Invents Act.
Respectfully submitted,
MYRA H. MCCORMACK PRESIDENT AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION 1400 CRYSTAL DRIVE SUITE 600 ARLINGTON, VA 22202 (703) 415-0780
LYNN C. TYLER COUNSEL OF RECORD BARNES & THORNBURG LLP 11 SOUTH MERIDIAN STREET INDIANAPOLIS, IN 46204 (317) 236-1313 [email protected]
Attorney for Amicus Curiae